The CII Institute of Logistics has welcomed the Government decision to appoint a logistics division under the Ministry of Commerce for integrating the various sectors of the fast-growing logistics industry.
Commenting on the much-awaited announcement recognizing the logistics sector with Infrastructure status, Mr. R. Dinesh, Chairman, CII Institute of Logistics, and Chairman of the Sector Skill Council, said: “The logistics sector in India is still very fragmented and has suffered from lack of investments and a proper recognition. We, at CII, have been pursuing this with the Government at various levels and through various ministries for the last few years. We are extremely delighted and sincerely thank the Government for appointing a Logistics division under the Ministry of Commerce for integrating the various sectors of Logistics.”
He added: “Now, with this recognition as Infrastructure status to the logistics sector, it will not only help bring in more investments in to this sector but, most importantly, bring down the overall logistics cost by 1-2%. We expect the sector, which already provides over 17 million jobs, to grow at an even faster rate going forward and provide even higher employment opportunities than before. The Government has been extremely supportive to our various representations, and we welcome the speed at which this action has been taken. We look forward to working with the Government even more actively in future for the growth of the logistics sector.”
Mr. K.V. Mahidhar, Head, CII Institute of Logistics, observed: “Our institute will continue to work with both users and service providers to capitalize on the opportunities and the thrust by the Government, to further improve the competitiveness of the logistics sector. Subsequently, this will lead to the enhancement of the logistics performance index of the country.”
What ‘Infrastructure’ status means for logistics sector:
Modern Logistics assets needed for the economy in the post-GST era will involve heavy capital investments with long gestation periods (~10-20 years) at the current level of returns. Thus, there is an urgent need to facilitate the credit flow into the sector with longer tenures and reasonable interest rates.
The Infrastructure status for the logistics sector can result in an integrated planning of the logistics infrastructure and better utilization of the existing assets and resources with a focus on timely maintenance and upgradation
Physical infrastructure and transportation capacity related investments are crucial for enabling and promoting multimodal transport in the country
The Infrastructure status will help in providing an easier access to institutional credit thereby reducing the cost of borrowing for the Logistics infrastructure. It will simplify the process of approval for construction of multimodal logistics (parks) facilities that includes both storage and transport infrastructure
It also encourages market accountability through regulatory authority and can attract investments from debt and pension funds into recognized projects.